Randgold profit doubles despite Mali turmoil

Gold producer Randgold Resources (LON:RRS, NASDAQ:GOLD) posted today strong results for its first quarter output and profits despite the political turmoil in Mali, from where it extract two-thirds of its gold output.

The West Africa-focused gold miner said it increased its production by 19% and doubled its first-quarter profit, boosted by higher gold sales and prices.

Profit increased to $104 million, while production climbed to nearly 166,000 ounces. Profit and production, however, were down by 28% and 13%, respectively, compared to the previous quarter’s record results.

Operationally, a key highlight was the commissioning of the third mill at Loulo-Gounkoto Complex. Randgold is now looking at the opportunity of lifting throughput to 5.4 million tonnes per annum (mtpa), versus a planned capacity of about four mtpa. A preliminary economic assessment undertaken showed expansion capital expenditure of $120 million, cash costs of between $850 and $875 per ounce and an internal rate of return of between 23% and 52% at long-term gold prices of between $1,200 and $1,600 per ounce respectively.

The Morilla joint venture with AngloGold Ashanti, also in Mali, produced 21 852 ounces in the first quarter, compared with the 27 895 ounces in the December quarter and 22 286 ounces in the March 2011 quarter.

Randgold stated that its operations were largely unaffected by the coup, which temporarily caused the closure of the country’s borders and interruptions to its supply chain.

CEO Mark Bristow said the resumption of civilian rule in Mali was expected to ensure that the operations continue to run at full production.

At Tongon, recoveries disappointed as mining moved through the transition ore, declining from 85.1% to 80% because of a lack of oxygen supply and power outages.


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